Simplifying Your Business
By Robert W. Bradford, President & CEO
Last week, I was talking with someone about their insurance agent. She was absolutely thrilled at how the agent handled a recent car accident, saying “She made everything so much simpler!” It got me thinking about simplicity, and how it works in companies we like – and those we don’t like. What hit me was that the way your company handles simplification will put you clearly into one camp or the other, and it has a lot to do with the attitude you have about your business, your employees, and your customers. These attitudes will determine how you simplify – and whether that simplification will work to your advantage.
Some might read the above statement and say “Hey, simple is always better, right? Isn’t any simplification good?” The answer is a resounding no. For example, let’s look at a complication in the airline business: sometimes people buy tickets and end up wanting to switch flights. In the worst case, this will cause lost revenue as an airplane ends up taking off with an empty seat, because the airline was unable to resell the reserved space. This looks like a good situation for simplification – and most airlines ended up making their operations simpler by charging a stiff change fee for the most popular types of tickets. Sure, you could buy a refundable ticket for 50% to 100% more, but most people don’t do this because it amounts to hundreds of dollars. What has happened here? There was a complication – sometimes people change their travel plans – and the airlines responded with a simplifying policy – if you change your ticket, you will spend a lot more money. On the surface, this looks like a perfect approach, but look closer – whose life was simplified? Not the customer’s, that’s certain. And, if you look even closer, the lives of ticket agents and people who work the phone lines for these airlines weren’t improved, either. The improvement was mostly for the people who seek to assure a constant, predictable stream of income for every seat on every route flown by these airlines. This isn’t a terrible policy, and it’s not irrational, but it moves the complication from the accounting and operations departments into the customers’ lives. As a rule, this seldom works for a simple reason: if enough competitors decide they are happy to take the complication on for themselves, it creates a huge disadvantage for those that stick with pushing the complication onto the customer. In other words, by simplifying your life – or the lives of people in some departments in your company – you create a serious competitive disadvantage for your company with some customers.
Does this mean you should always take on complications for your customers, and seek to simplify their lives for competitive advantage? No – but it does mean you should seriously examine all of the “normal” practices in your industry to see if you can create an easy win by breaking the “rules” that actually annoy your customers. Obviously, it pays to assess the costs and benefits involved. In my mind, a change like this requires data-based analysis and testing. But never shy away from it – picking up a few points of market share, or even dominating a segment of customers, could well be worth the complications you bring inside your company to simplify the lives of the people who give you money every day.
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